The World Bank Group and the Islamic Development Bank published the first Global Report on Islamic Finance. Subtitled “A Catalyst for Shared Prosperity?”, the report provides an overview of trends in Islamic finance, identifies major challenges hindering the industry’s growth, and recommends policy interventions to leverage Islamic finance. According to the report the Islamic finance industry needs to expand beyond banking, which is currently a dominant component of Islamic finance, accounting for more than three-quarters of the industry’s assets. Another area of development is Islamic capital markets. The use of sovereign sukuk to mobilize financing is essential to develop the market. The report also notes that using Islamic social finance can alleviate poverty and create a social safety net for the extremely poor. By tapping into the potential of the institutions like zakat and waqf, the report estimates that resource needs for the most deprived in South and Southeast Asia and Sub-Saharan Africa could be met.
The Islamic Corporation for the Development of the Private Sector (ICD), a development finance institution of the Saudi Arabia-based Islamic Development Bank (IDB), and Dragon Capital Partners, the venture capital and private equity arm of Ukraine-based Dragon Capital Group, recently announced the intention to develop the Silk-way Growth Fund, a Sharia-compliant investment fund benefitting “high growth” small and medium-sized enterprises (SMEs) involved in manufacturing in Kazakhstan. The fund is slated to address the “financing gap created due to difficulty of accessing capital at sustainable market rates and the banking sub-sector’s lack of confidence in SME entrepreneurs.” According to ICD, SMEs make up 96 percent of all businesses in Kazakhstan and 25 percent of the country’s GDP.
ICD will act as fund advisor to Silk-way as part of its SME Platform, an initiative aimed at building Sharia-compliant investment management capacities in ICD’s 52 member countries, and it will consider investing capital in the fund as plans for the fund are finalized.
Interview with director and head of Islamic Corporation for Development's India operations.
For the first time, the Jeddah-based Islamic Development Bank has forayed into a non-member country by announcing setting up of a non-banking financial company in India through its 100% subsidiary Islamic Corporation for the Development of the private sector. Based on the Islamic principle of not charging interest on loans, ICD will operate through a registered office in Mumbai, with prominent businessman from Gujarat, Zafar Sareshwala, heading its India operations as director. In an interview with Vinay Umarji, Sareshwala talks about how the NBFC will play a catalyst for small businesses by sharing their profits and losses instead of charging interest on finance extended.
What kind of entity is Islamic Development Bank setting up in India? How will it function?
The important role of the Republic of Turkey in the global Islamic finance industry as well as its distinct standing both at the official and popular levels, the steady growth both of Islamic banks and financial institutions operating there, in addition to the parallel evolution of its regulatory and supervisory framework, the AAOIFI has been keen to strengthen professional and technical ties with this country. This was translated into an official visit by AAOIFI to a number of banking regulatory and supervisory bodies as well as a number of Islamic banks and financial institutions, professional entities and academic institutions.
Turkey wants to set up a new Islamic megabank. Deputy Prime Minister Mehmet Simsek said the prime shareholders would be Turkey's Treasury and the Islamic Development Bank. Simsek prepares for talks with Indonesia in Jakarta next week on proposals to start a Shariah-compliant megabank that will lend to companies and infrastructure projects. Indonesia and Malaysia have long tried separately to establish a Shariah-compliant lender but faced obstacles until now. Turkey is ready to commit more than $300 mn for the lender as capital.
After a three-year pause The Islamic Development Bank (IDB) plans to sell ringgit-denominated sukuk in the Malaysian market. The IDB board has approved the issuance of up to 400 mn ringgit ($99.9 mn) in sukuk in 2016. IDB president Ahmad Mohamed Ali said it could be both private and public placement, but the specific size and timing of the deal depend on market conditions.
University of New Orleans finance professor M. Kabir Hassan has won the IDB Prize in Islamic Banking & Finance from the Islamic Development Bank.The prize is awarded for outstanding merit in the fields of Islamic economics, banking and finance. Hassan will receive an award of about $47,000. He will be presented with the prize at the IDB board of governors’ annual meeting May 15-19 in Jakarta, Indonesia, where he will also deliver a lecture on his research in Islamic finance.
The Islamic Development Bank (BID) has given Benin 216.4 million U.S. dollars to support development projects in the higher education sector and an integrated micro-finance program. The first part of the BID aid of about 166.4 million dollars will be spent on funding development projects in the higher education sector. The other 50 million dollars will support the integrated micro-finance program. The program aims to contribute to the improvement of living conditions for rural communities in Benin. It will help to increase access to funding for small scale traders and reinforce capacities of micro-finance institutions, among others. The latest aid brings BID’s total funding to Benin to around 824 million dollars.
The Jeddah-based Islamic Development Bank (IDB) has signed a SR200 million agreement with an Indian non-governmental organization (NGO) to provide medical care for poor rural people. The money is part of a SR1 billion donation which was given by a Saudi benefactor to be utilized for the benefit of poor people across the globe. The benefactor earmarked SR200 million for India, thereby funding 15 mobile health clinics, which the IDB will maintain for the first five years. The rest of the money is reserved for the deployment of 60 mobile clinics in Pakistan, Bangladesh, Afghanistan, Yemen, Kyrgyzstan and Uzbekistan.
Qatar has teamed up with American billionaire and co-founder of Microsoft Bill Gates to combat poverty. Representatives from the Qatar Development Fund pledged $50 million to the Lives and Livelihood Fund, a $2.5 billion fund established by Bill and Melinda Gates Foundation and the Islamic Development Bank, in an effort to provide financing for some of the world’s poorest Muslim countries through grants and shariah-compliant loans at below market rates. The fund’s projects will focus on four areas including infectious diseases control and eradication, primary healthcare, agriculture and food security, and basic infrastructure.
World Bank Group President Jim Yong Kim, United Nations Secretary-General Ban Ki-moon and President of the Islamic Development Bank Group Dr. Mohamed Ali Al-Madani arrived in Lebanon today at the start of a joint visit to rally global support for the shared responsibility of promoting peace and development in the Middle East and North Africa (MENA) region. The three organizations are jointly supporting an initiative to raise additional financing needed to help countries in the region cope with the immediate consequences of conflict, while laying the foundations for recovery and reconstruction. Following the Lebanon visit, World Bank President Kim and Secretary General Ban will travel together to Jordan and Tunisia.
The Islamic Research and Training Institute (IRTI) of the Islamic Development Bank (IDB) Group has signed an agreement with Al-Manhal, a provider of electronic scholarly publications, to host IRTI's Islamic finance publications in Al-Manhal electronic databases. The Memorandum of Understanding (MoU) provides for electronic versions of IRTI's publications--including books, reports, training manuals, and conference proceedings--to be made available to Al-Manhal subscribers that include universities, government agencies, corporations, and public libraries. IRTI Director General, Prof. Mohamed Azmi Omar, and Al-Manhal representative, Mr. Rany Al Baghdadi, jointly signed the MoU at the IDB Headquarters in Jeddah.
The Jeddah-based Islamic Development Bank (IsDB) and Mardi Holdings of Malaysia are interested in investing in the agriculture sector of Suriname, according to the CEO of Mardi, Anas Nasrudin, who met with farmers in Suriname this week. The Islamic Bank and Mardi Holdings are seeking joint ventures in agriculture and food production. Besides rice, they have shown an interest in herbal products, coconut, pineapple, and the palm oil industries of Suriname. Mardi Holdings and the Islamic Bank will assist Suriname to tap the Hallal market globally, assisting in standardisation, accreditation, certification and adoption of the Hallal industry.
His Excellency Khaled Mohamed Al-Aboodi, CEO of The Islamic Corporation for the Development of Private Sector (ICD) is in India to explore possibilities of expanding the Group activities and interests in India. H.E. Khaled Al-Aboodi’s will explore the possibilities of setting up Interest Free Banking in India, long term solution of accommodating Indian pilgrims, pilgrim education on rituals of Hajj and an initiative of Medical Mobile Units for use in Rural India on behalf of IDB Group. The ICD has decided to launch a US $ 1 billion fund for financing the construction and is in continuous discussion with the Consulate General of India in Jeddah who has been provided with a draft MOU for co-operation.
Islamic Development Bank (IDB) is set to initiate talks with the Reserve Bank of India to allow them to introduce Islamic Financing in India. Islamic finace refers to the ways by which corporations who are a part of the IDB group, including banks and other lending institutions, raise capital in accordance with or Islamic law. IDB is also looking at starting interest-free banking in the country wherein instead of extending cash loans, the lender buys and leases the product for which the loan is required. And it earns rental on it.
Indonesia is likely to defeat Turkey to host the Islamic Development Bank’s (IDB) headquarters, a spokesman of the bank has said. Indonesia's strategic position and role during the Organization of Islamic Cooperation (OIC) summit were two driving factors behind the decision. IDB Indonesia country director Ibrahim Shoukry said the bank had committed to investing US$1.2 billion on projects in Indonesia over five years. Indonesia, he further said, had some advantages over Turkey due to its prospective market in Asia, which is healthier than Turkey's main market, Europe. Indonesia’s market will be broader due to the ASEAN Economic Community.
The Islamic Development Bank (IsDB) has issued a $1.5 billion five-year Sukuk as part of its $25 billion Sukuk programme. The issuance was arranged by Emirates NBD Capital, Boubyan Bank, Gulf International Bank CIMB, JP Morgan, Natixis and Standard Chartered. It will be listed in the London, Malaysia and Nasdaq Dubai stock exchanges.
Jeddah-based Islamic Development Bank has set final price guidance for a dollar-denominated sukuk issue of five years duration, which it plans to sell later on Thursday. Guidance has been set at 50 basis points over midswaps. Islamic Development Bank on Wednesday opened books and set initial price thoughts in the range of mid-to-high 50s bps. The benchmark-sized offering has received orders worth $1.4 billion from investors so far, of which $190 million came from the joint lead arrangers. The sukuk offering is being arranged by Boubyan Bank, CIMB, Emirates NBD Capital, Gulf International Bank, JP Morgan, Natixis and Standard Chartered.
President Muhammadu Buhari on Thursday in Mecca, Saudi Arabia, said he welcomed an offer by the Islamic Development Bank (IDB) to organisze a financing roundtable in Abuja to mobilise more funds for investment and development of infrastructure in Nigeria. The president of the IDB, Dr Ahmed Mohammed Ali made the offer at a meeting with Buhari who is currently on an official visit to Saudi Arabia. Ali assured Buhari that the IDB would work with its traditional partners such as the Saudi Fund, the Kuwait Fund, Arab Bank for Development in Africa and the Abu Dhabi Fund, to increase the quantum of funding available to Nigeria. Buhari welcomed the plan by the IDB to fast track the take-off of the Bilingual Education Programme, aimed at integrating the Almajiri system of education with western education in Nigeria.
The government of Azerbaijan announced that it is in talks with the Islamic Development Bank (IDB) on application of Islamic banking instruments in the country. Deputy Economy Minister Sahil Babayev also said that the Bank is ready to provide technical assistance to Azerbaijan, which has a predominantly Muslim population. The primary scope of our model’s project has already been outlined, he added. Azerbaijan, alongside Kazakhstan, is among several central Asian countries creating a more welcoming framework for sharia-compliant banking to attract investments and financing from the Islamic capital market. Babayev faced difficulty to name the exact date of introduction of Islamic banking model in Azerbaijan, explaining it with the number of issues to be solved.